Greece should be able to go back to the markets late this year or early next year, provided it keeps up with the implementation of agreed reforms, European Stability Mechanism (ESM) head Klaus Regling said on Thursday. He was replying to questions during a press conference held to present the ESM annual report for 2016.

“This will also be in line with the experience we have seen in other programme countries,” he added, noting that Ireland, Portugal and Cyprus had all issued their first bonds several months before they exited their respective programmes. “Not to finance everything…but to begin to test the markets. That is useful — not to rely 100% on the ESM until the end of the programme and then from one day to the next rely 100% on the markets. It is better to have a gradual move towards the market and I think with the right credibility, which requires that the agreed reforms are implemented, that will be possible.”

The five-page section on Greece in the ESM report, meanwhile, noted that the country continues to face significant challenges, in spite of the “notable successes of the programme.”

Political and economic uncertainty were destabilizing the business environment and when combined with high taxation and a high proportion of non-performing loans in the Greek banking sector “the overall situation prevents growth and investments in the private sector.”Reporting on the short-term measures adopted to ease Greek debt, the ESM report said that once fully deployed they will reduce Greek debt by 20% of GDP and Greek financing needs by 5 and up to 2060. According to the report, in current net value, the short-term measures reduce the debt burden on Greece by about 8.7% of GDP.

The report pointed to the start of economic recovery in early 2016 — which then “stumbled” due to uncertainty created by delays in the completion of the programme reviews — and also the overshooting of fiscal targets, such as the primary surplus target. On the basis of spring forecasts published last May, the ESM expects Greece to experience a 2.1% of GDP growth rate in 2017 and 2.5% growth in 2018, while the current accounts balance is expected to reach -0.5% and -0.3% of GDP in 2017 and 2018, respectively.